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Recently I wrote that the states could kill Obamacare by refusing to implement its insurance exchanges. This strategy would be effective because the survival of PPACA depends on the ability of Beltway bureaucrats to dole out its tax credits and subsidies, but the law stipulates that all such assistance must be dispensed via state-run exchanges. Likewise, PPACA's employer mandates can only be triggered by premium assistance that originates from state exchanges. Even if the federal government creates an exchange in a state that has declined to do so, it would not be authorized to issue tax credits or fine noncompliant businesses. Thus, if the majority of the states refuse to create exchanges, it will doom Obamacare.

There is, however, one weakness inherent in this strategy. It assumes that the Obama administration will obey the law. The plan will be difficult to implement if the President and his accomplices simply ignore the text of PPACA and illegally funnel tax credits and subsidies through federally-created exchanges. The past three years have certainly provided plenty of evidence that these people would not reject this course of action merely because it violates the law. It should, therefore, come as no surprise that it is precisely what they have decided to do. The IRS recently finalized a regulation that makes clear the administration's intention to provide premium assistance through federal as well as state-based exchanges.

In "Taxation Without Representation: The Illegal IRS Rule to Expand Tax Credits Under the PPACA," Jonathan Adler and Michael Cannon describe what the Obama administration is up to: "The plain text of the Act only authorizes premium-assistance tax credits and cost-sharing subsidies for those who purchase plans on state-run exchanges, and the IRS rule's attempt to offer them to other individuals cannot be legally justified…" Adler and Cannon go on to outline the scope of this latest example of skullduggery by Obama's apparatchiks: "[T]he IRS is attempting to create two entitlements not authorized by Congress, and in the process, to tax employers whom Congress did not authorize the agency to tax." >>>

Can anything be done about this? According to Adler and Cannon, the IRS rule is blatantly illegal and will cause real harm, particularly to businesses: "Because the granting of tax credits can trigger the imposition of fines on employers, the IRS rule is likely to be challenged in court." If the states continue to set up exchanges at the current glacial pace, the federal government itself will need to create 20 to 30, and this will provide a lot of employers with standing to file lawsuits. It's unlikely, however, that anyone will take legal action until after the upcoming election. So, once again, we're back to the voters. They can save everyone a lot of trouble by doing the sensible thing on November 6.